HSBC recorded a hit in annual profit on Wednesday as hefty impairment charges helped offset a boom in the bank’s wealth management operations.
The FTSE 100 banking titan recorded a seven per cent drop in pre-tax profit for the annual year, tumbling $2.4bn to $29.9bn (£22.1bn), though this did mark an uplift from the $28.9bn pencilled in by analysts.
The firm pointed to around $5bn in “adverse impact from the notable items,” which included the likes of a $1.1bn provision related to the Bernie Madoff fraud scandal made in the third quarter.
Still, revenue rose by four per cent to $68.3bn, driven by a boost in fee and income growth in the bank’s well division – a key area of focus for chief executive Georges Elhedery.
Wealth income streams rose 24 per cent to $9.4bn for the year.
HSBC: No more buybacks til stable footing
The firms common equity tier 1 (CET1) – a key indication of a lender’s finanical stability – remained at 14.9 per cent, which the firm said reflected an increase in risk-weighted assets driven by foreign currency translation differences and asset size movements.
HSBC is targeting restoring its CET1 ratio to the 14 to 14.5 per cent mark in the medium-term and the bank said it intends to withhold any buybacks until the goal is achieved.
The lender had hit pause on buybacks following the controversial decision to take control of Hang Seng Bank in a deal that represented a 30.3 per cent premium on the firm’s last closing price of HK$119.00.
The group said at the time it expects a capital impact of approximately 125 basis points on its CET1 ratio, which it plans to restore through organic capital generation.
Whilst no new buyback was launched the board kicked off a fourth interim dividend of 45 cents a share, resulting in a total of 75 cents per share for 2025, a fall on the previous year’s total of 87 cents.
Elhedery said: “We are becoming a simple, more agile, focused bank, one that moves with the speed our customers need to navigate the modern world. We are delivering growth, investing for growth and we are executing our strategy with discipline and precision.
“That gives us confidence in our ability to continue delivering for our shareholders.”
